Using Property Management for Short-term Rentals
What is property management?
Property management is the service of overseeing the residential or commercial real estate and generating income on behalf of the property owner. They can assist in management of short-term and/or long-term rentals and deal with the needs of the tenants or guests.
A property manager can provide any of the following services:
- Listing creation, marketing and management
- Professional photography
- Furnishing / styling
- Dynamic pricing
- Maximising occupancy
- Maintenance coordination
- Guest/tenant set up and communications
- Cleaning / housekeeping
Property management is often employed by industrial property investors and owners that need to manage multiple units. In the era of shared economy and holiday rentals (thanks to the rise of Airbnb), property management has become a popular service for airbnb hosts. With advanced technology and a team available 24/7, property management can help hosts maximise their occupancy by attracting more guests, getting cleaning done more quickly in between bookings, and apply dynamic pricing for maximal profit. Property management is even more useful for short-term rentals as maximising occupancy requires full-time dedication to listing and guest management due to the brevity of each stay.
How do property managers charge?
Oftentimes property managers will offer a shared revenue model in exchange for full management services. Some (although not a lot) offer a la carte services where a host can cherry pick some key services a property manager can offer.
Here are some fees you can expect from a property manager.
- Initial setup fee: This is ultimately a registration fee often inclusive of professional photography and listing creation services
- Management fee: This is the bulk of the charges related to employing property management often in the form of a % of guest revenue (often between 15-20%) or sometimes a fixed monthly fee
- Amenities: The restocking of key supplies (linen, shampoo, toiletries, etc.) will be charged as amenities fee which could be included in the management services or be part of the cleaning fee charged to the guests
- Cleaning fee: Cleaning/housekeeping fees are often charged to the guests and will vary based on the size of the property (keep in mind that Airbnb now requires much stricter checklist of cleaning to stop the spread of coronavirus)
- Maintenance fee: Property managers will often handle the coordination with maintenance needs in case an appliance in your home is not working properly during guests’ stay and the fee paid to the maintenance providers (e.g., plumbers) will be separately charged
- After-hours callout: Some property management services will charge if the manager needs to go out to the property outside normal operating hours for some unforeseen or emergency issues such as guests being locked out
- Add-on services: There could be other add-on or premium services a property manager could charge for such as noise monitoring, furnishing/styling or managing your listing on multiple sites
How do I find a property manager that’s right for me?
Who you hire to help manage the property really depends on your goals as a host. If you are a casual host, then self-management may make more sense for you. If you are trying to rent out the property full-time or almost full-time, then it may be worthwhile to have a dedicated property manager in employment.
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There are many ways you can minimise your risks and get your investment’s worth. In your negotiation with the property manager, sometimes you can ask for a trial period or a discount rate in the first 1-3 months. Be sure to ask about how fast they can clean out the house after the guests check out and their pricing for amenities (i.e. restocking). The speed of housekeeping is key to maximising your occupancy rate. Another way to assess the quality of the property management service is by understanding the technology they use to manage your listing. The more automated they are in how they use dynamic pricing, the more likely your property will be rented at the maximum possible rate.
When you speak to a few candidates, test their knowledge on short-term rentals as well. Do they understand ways you can minimise your risks? How knowledgeable are they about the local laws? If your property is rented out at higher frequency, you may be entitled to some tax deductions. You want to find a property manager who can act as an adviser. If this is your first time with a property manager and/or airbnb hosting, then it might be best if to find a property manager with no lock-in contracts so you can learn from the experience and possibly switch with minimal financial repercussions.
Other helpful tips for hosts:
